Nunavut minister makes pitch for new energy sources, oil and gas development

"We must benefit directly from development"

JANE GEORGE

“Nunavut must have a role to play in managing oil and gas exploration and development, and we must benefit directly from development" — that's what Peter Taptuna, Nunavut's energy minister, told a Senate committee March 15 in Ottawa. (FILE PHOTO)

Nunavut needs money to develop new energy sources, boost its economy and free the territory from dependence on dirty diesel fuel, Nunavut’s energy minister Peter Taptuna said March 15 in Ottawa before the Senate committee on energy, the environment and natural resources.

And key to that is devolution of royalties now flowing to the federal government to Nunavut, Taptuna said.

“While we would benefit from employment and some economic activities stemming from petroleum development, the federal government will claim all the royalties,” he said.

“Nunavut must have a role to play in managing oil and gas exploration and development, and we must benefit directly from development.”

Nunavut is part of the “Canadian family,” Taptuna said, but the territory faces energy challenges that “make us seem like a foreign country.”

“Unlike our southern and even our northern neighbours, all of Nunavut’s energy generation is by diesel plants,” he told the committee members during a 20-minute address that started shortly after 8 a.m. in a Senate hearing room in Ottawa.

The retail electricity prices charged by the Qulliq Energy Corp. range from 52 cents a kilowatt hour in Iqaluit up to $1.02 per kWh in Kugaaruk, Taptuna said.

In most southern jurisdictions, power rates usually range from about five or six cents per kWh up to about 10 or 15 cents per kWh, depending on the time of day and the rate of consumption.

And the diesel-power plants that supply Nunavut with the most expensive electrical power in Canada are old and nearing the end of their life cycles, he said.

“This is clearly not sustainable,” Taptuna said, noting Nunavut must make “difficult decisions must be made if we want to see real changes in the energy sector.”

“We must develop renewable and alternative energy sources,” he said.

Hydroelectric power offers the best hope for reducing Nunavut’s dependence on fossil fuels “quickly, substantially, and affordably,” according to Taptuna.

But there’s a big financial obstacle to hydroelectric power development in Nunavut.

With support from the federal Green Infrastructure Fund, Nunavut could start planning for a dam and power project near Iqaluit that comes with a $167-million price tag, he said.

But the Qulliq Energy Corp. hasn’t been able to qualify for money from that fund because Nunavut’s power utility, a Crown corporation, is considered to be “for-profit” company.

And that’s kept the project, located about 45 kilometres from Iqaluit, from moving ahead because Nunavut can’t cover capital costs by borrowing money, Taptuna said.

As of March 15, Nunavut has the go-ahead to incur more $400 million in long-term debt.

But right now, the territory’s long-term debt, almost all inherited from the Northwest Territories, stands at about $140 million, leaving little borrowing room even with that increased amount.

But hydro development in Iqaluit could give a boost to the development of mining nearby, Taptuna said.

If the proposed Chidliak diamond mine near Iqaluit goes ahead, there may also be an opportunity for a shared hydroelectric development, he suggested.

And hydro projects in the Kivalliq region could also open up that region for mining and new infrastructure, such as a road. Excess power could be exported south to Manitoba, Taptuna said.

As well, development of Nunavut’s 200 billion barrels of crude oil and 27 trillion square feet of natural gas could also “greatly reduce our dependence on federal transfers, and would bring significant benefits to different regions of Canada,” Taptuna told senators.

But first, Nunavut needs to work with the federal government and with industry to address the regulatory, technical, and cost risks of petroleum development in Nunavut, he said.

Nunavut also supports “responsible uranium development,” he said.

During questioning from the senators, Taptuna said Nunavut wants to strike a balance between development and conservation to “move our future forward.”

Among other possible energy sources cited by Taptuna: a home-grown oil well on the Bent Horn oil field located closest to Resolute Bay at the outer borders of the Bathrust Inlet national park reserve.

Early in 1974 Panarctic discovered the Bent Horn oil field on Cameron Island in the High Arctic, where the oil lies in ancient reef rocks, more than three km below surface.

In 1985, the first shipment of 100,000 barrels of oil was made by an ice-breaking tanker to a refinery in Montreal, and these shipments continued until the late 1990s.

This well, which produced oil until 1996, still contains four million barrels or more.

And getting that well back into production is an option that’s being explored, said Taptuna’s deputy minister, Bob Long, who admitted there was not “complete agreement” on how that will happen.

But it Nunavut can’t come up with cheaper sources of fuel for remote communities, the sustainability of these communities is “not very good,” Taptuna warned the Senate committee members.

In Nunavut’s favour, global warming may make Nunavut “more attractive” to development.

A longer ice-free shipping season in the Arctic could help open the door to the development of natural gas, which require a plant to liquefy gas and ship it out year-round, he said.

As for renewable energy sources, Nunavut plans to keep on eye on the output of a $25-million wind farm at the Diavik mine in the NWT, where 300-metre windmills are supposed to generate 10 Mw of power for the mine.

Many of the senators asked Taptuna and Long basic questions about Nunavut and how it buys, transports and stores the diesel fuel now used for power production.

But Nunavut senator Dennis Patterson used the forum to plug for devolution, saying that given the needs for power and development in Nunavut, the GN needs devolution because it will bear the social costs of resource development.